Yeah, that's way too old. I am not sure what's wrong with that version. You may want to try the latest version downloaded from here:
http://www.robotc.net/download/nxt/
However, since the latest version is 3.x, your old license won't work. You may want to just activate the trial license and try it out.
Or at least upgrade to the latest 2.26.1

BTW, when you upgrade to a new RobotC version, you also need to upgrade the NXT firmware by clicking:
Robot->NXT brick->Setting up communication link->Updating firmware

Wording may not be exact. I am quoting from memory.

I've update the version to 2.26
Download the firmware again to the NTX, and it seems to work right now.

Don't know where it went wrong.

Thanks for your help sofar!

I remember reading awhile back that some users were reporting issues with programs not "updating." I believe it could be resolved by first compiling it without downloading to the robot (F7), and then doing a normal build (F5). But it looks like you got everything worked out anyway.